Dubai : A large number of construction sites where building activity has started and stopped, have been abandoned, but maintenance and insurance are crucial to halt potential disputes, experts said at a seminar yesterday.

"Only around 20 to 30 per cent of Dubai's construction sites where work has stopped are adequately secured and the buildings protected," Andrew MacDonald, country director, Meinhardt Dubai, told Gulf News.

Owners shy away from the costs of protecting the site, added his colleague Tanmay Biswas.

Exact numbers of sites where work has been abandoned are not available, but construction research firm Proleads estimates that around $5 billion (Dh18.36 billion) worth of projects have been put on hold in the region during the last quarter of 2009. Some are still in the design stages, but others have started construction and then ground to a halt.

Law firm Taylor Wessing organised a seminar called "Ghosts of Buildings, Past, Present & Future", which examines the implications for all stakeholders involved, should latent defects be discovered when a developer or investor wants to restart and complete construction on an abandoned site.

"The contractor has a liability of ten years to correct defects after hand-over but the law has no regard for breach of contract and this is a concern," Mark Fraser, partner at the firm, pointed out.

Liabilities

Once the contractor is terminated, the liability to protect the site passes to the owner, but if latent defects (only visible after thorough inspection) are discovered on restarting construction, the finger pointing begins.

The load could be eased by allowing policies that insure against physical loss or damage to works, plant, equipment and materials during the course of construction, run on even while construction is stopped.

"Policies get terminated here. In an ideal world they run through the standstill period with reduced perils, mostly natural disasters, and on restart the underwriter reverts back to full policy," said Wayne Snow, senior client manager, risk management practice leader, Marsh Insco.

Policies

Insurance policies help bridge the gap covering latent defects, although there are exclusions like faulty workmanship.

The expectation that professional indemnity (PI) insurance should cover architects and engineers liability is also an issue as it doesn't, he added.

"The PI can merely mitigate liability. Joint liabilities are not well addressed sitting on the balance sheets there is no risk transfer."